About Participation in the Removal of the Director of a Company

• The Stockholders who are keeping shares not less than a sum of Rs 5,00,000 as a paid-up capital shares on the period of notice or are holding not less than 1% of the total voting power, can send a special announcement to the company for ‘removal of the director’.
• Shareholders concede the power to decide the date of the meeting. However, the particular notice shall not be sent earlier than three months from the time of the meeting, although the resolution is to be moved at least 14 clear days before the date of the session.
• The considered director has given the option of being heard at the meeting before the board of the directors. If the objects are validated by the stockholders and the board of the directors, then they can eliminate the procedure of the removalof Director after consideration.

Understandings behind Resignation of Directors

Dispute with the Board

When many directors work commonly, a difference of opinion ought to happen. It results in hindering the overall performance of the corporation; in such a position, the directors may be removed with due considerations

Misuse in the Company Affairs

When a director gets introduced to the illegal practices of the company, he may find himself becoming dragged into it that matches his reason for resignation. To defend the circumstances appearing out of such activities, he may be removed by due considerations.

Suspension due to infringement

Any non-adherence, violation, or defaults on the director’s end can lead him into trouble.

The recession of nomination

It is only appropriate to the Nominee directors who primarily get appointed by the NBFC’s investors on the BOD. Once the transaction between the company and entity is complete, the Nominee director can resign, or he may also leave after the removal of nomination.

What is the Eligibility Criteria to be a Director?

There are no designated qualifications, but an individual should comply with the following mentors be a director:However, according to the law, a specific natural person only can be a director of any company.

Age Demarcation

There is no alternate fixed age for being a director, but it is essential that the person who should be competent to enter into any contract. Moreover, in a matter of ‘managing director,’ ‘full-time’ director, or ‘independent’ director of a recognized company, the person becomes eligible to be a director if he is of 21 years and has not reached the age of 70 years officially.

Determination of Nationality

There is no restriction. However, there must be a minimum of one Indian director in the company.

DIN Needed

To be eligible to be designated as a company’s director, the person must get a Director Identification Number. The main intention behind having a DIN is to make assured that fake directors do no fraud, and in case anyone ventures any such criminal activity, they can be traced within this unique number.

Limit of Valid directorship

A personality can only be a director of 20 separate companies at a time. Out of these 20 companies, only ten can be public companies.

Ineligibility

Unsound mind or bankrupt person

Anybody who is of unsound mind or is incompetent of making decisions on his own cannot be appointed as a director. This involves children, mentally disabled individuals, and frames with unstable mental faculties. Furthermore, insolvent people or individuals who have maintained bankruptcy claims in the court of law are disqualified from acting directors.

Criminal background

If a personality has a criminal record and was sentenced to confinement for more than seven years or more, he cannot be a director.

Pending overdue returns

If the individual has not met previous returns in any of the preceding years, he shall be barred from keeping the directorial position.

Recognition: Types of Director

The directors of a company change in terms of the role they play, such as managing director who runs the overall purposes of the company, executive directors who look after the day to day methods, and independent directors who assure proper governance of the company. Thereby, one company can have increased directors; nevertheless, the appointment of directors also depends on the type of business like:

• As per ‘Section 149(1)’ of the Companies Act, 2013, every public corporation shall have a minimum number of 3 directors, whereas the least amount of directors in a private company is two and only one director in case of the ‘One Person Company’.
• The highest number of directors in a public company is 15. Besides, a company can also select more than 15 directors after getting a permit from a specific resolution in the general meeting. The method of appointment of more directors does not expect the endorsement of the Central Government.
• A director can determine the maximum number of directorships up to 20, including any alternative directorship of a person.
• In the event of any private company or ‘public company,’ either holding or subsidiary company shall restrict to10 directorships in the ‘public company’.
• All the Certified companies must appoint at least one woman director in the Board of Directors in a year from the enforcement of the second Proviso to Section 149(1) of Companies Act.
• Similarly, every public company having a turnover of Rs. 300 Crore or a paid-up portion capital of Rs. One hundred crores under the latest audited financial statements shall appoint at least one woman director within a year from the convocation of the second Proviso to Section 149(1) of Companies Act.

Note: If any person holds the efficiency of director in more than 10 or 20 companies before the commencement of Companies Act, then he shall have to determine the companies where he wishes to maintain or resign as the director within one year from such beginning. After that, he shall inform about his decision to the chosen companies as well as the concerned Registrar.

Why Add and Switch?

• Get fresh talent on council
• No Compulsion of ownership
• The incompetence of existing directors
• To meet the sanctioned limit